How to Calculate EMI
6 min read · Updated September 26, 2026 · by Thomas M, Registered Investment Adviser (South Carolina)
An EMI is the fixed monthly instalment that repays a loan with interest. The formula looks intimidating but follows from one idea: each month interest is charged on what you still owe. This guide walks through it with a real example.
The EMI formula
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r the monthly rate (annual rate ÷ 12 ÷ 100) and n the number of months.
Worked example
₹10 lakh at 8.5% for 20 years: r = 8.5 ÷ 12 ÷ 100 = 0.0070833 and n = 240, giving an EMI of ₹8,678.23. Total payable is ₹20,82,775.76, so total interest is ₹10,82,775.76.
Interest vs principal over time
In month one, interest is balance × r = ₹10,00,000 × 0.0070833 ≈ ₹7,083, so only the rest of the EMI reduces the loan. As the balance falls, the interest part shrinks and the principal part grows. The EMI calculator shows this year by year.
How tenure changes the cost
| Tenure | EMI | Total interest |
|---|---|---|
| 10 years | ₹12,398.57 | ₹4,87,828.27 |
| 15 years | ₹9,847.40 | ₹7,72,531.20 |
| 20 years | ₹8,678.23 | ₹10,82,775.76 |
| 25 years | ₹8,052.27 | ₹14,15,681.25 |
Prepayment
Prepaying reduces the balance, so less interest is charged afterwards. Paying ₹5,000 extra every month on ₹25 lakh at 9% for 20 years saves ₹11,82,873.35 and ends the loan 7 years 2 months sooner.
Practice questions
Test yourself, then tap to check. Answers are calculated by the tools linked below.
- What is the EMI on ₹30 lakh at 9% for 15 years?
Show answer
Monthly EMI: ₹30,428.00 · Total interest payable: ₹24,77,039.55
- ₹75 lakh home loan at 8.6% for 30 years, 0.5% fee. What is the EMI and total interest?
Show answer
Monthly EMI: ₹58,200.88 · Total interest payable: ₹1,34,52,316.30
- A ₹12 lakh car with 25% down, 9.5% for 48 months and 1% fee. What is the EMI?
Show answer
Monthly EMI: ₹22,610.82 · Total interest payable: ₹1,85,319.50
Frequently asked questions
How is EMI calculated?
With P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1) using the monthly rate and the number of months.
Does EMI change over time?
On a fixed-rate loan the EMI stays constant; on a floating-rate loan the EMI or tenure changes when the rate does.
Is a shorter tenure always better?
It costs less interest but needs a higher EMI. Pick the shortest tenure you can afford comfortably.
How does prepayment help?
It lowers the balance on which interest is charged, shortening the loan or reducing the EMI.
Try it yourself
EMI CalculatorWork out your monthly EMI, total interest and a year-by-year schedule, with an optional prepayment to see time and interest saved.Home Loan EMI CalculatorCalculate your home loan EMI, total interest, processing fee, prepayment savings and how much loan your income can support.Car Loan EMI CalculatorCalculate your car loan EMI, down payment, total interest and the real total cost of the car.Personal Loan EMI CalculatorCalculate your personal loan EMI, processing fee with GST, the cash you actually receive and the true effective rate.Keep learning
How Mortgage Payments Work7 min readHow to Calculate a Car Loan Payment6 min readHow to Calculate Personal Loan APR6 min readReviewed by Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Spot a mistake? Tell us. See our editorial policy. Finance content is educational and not financial advice; see the disclaimer.